The world is witnessing a transition towards sustainable transportation, with hybrid electric vehicles (HEV) and electric vehicles (EV) taking center stage. Environmental concerns, technological advancements, and government regulations drive the shift toward electrification. As the demand for HEVs and EVs grows, the aftermarket industry is poised to reap the benefits of this trend. In this blog post, we will explore the future of the HEV and EV market, focusing on the opportunities in the aftermarket.
HEV and EV Market Growth
The HEV and EV market has been growing steadily in recent years, and the trend is expected to continue in the foreseeable future. According to a report by MarketsandMarkets, the global EV market size is projected to reach $803 billion by 2027, growing at a CAGR of 22.6% from 2020 to 2027. Similarly, the global HEV market size is projected to reach $219 billion by 2027, growing at a CAGR of 12.7% from 2020 to 2027. The growth of the HEV and EV market can be attributed to various factors, including:
- Environmental Concerns: The need to reduce carbon emissions and air pollution has become a global concern. HEVs and EVs emit less or no greenhouse gases, making them an attractive option for environmentally conscious consumers.
- Technological Advancements: The development of better battery technology, faster charging infrastructure, and improved range has made HEVs and EVs more convenient and practical for everyday use.
- Government Regulations: Governments worldwide are implementing policies and incentives to encourage the adoption of HEVs and EVs. For example, the UK government has pledged to ban the sale of new petrol and diesel cars by 2030, while the European Union has set a target of reducing greenhouse gas emissions by at least 55% by 2030.
Opportunities in the Aftermarket
The growth of the HEV and EV market presents numerous opportunities for the aftermarket industry. As more HEVs and EVs hit the roads, the demand for maintenance, repair, and customization services will likely increase. Here are some of the areas where the aftermarket industry can tap into the HEV and EV market:
- Battery Maintenance, Remanufacturing and Replacement: As the adoption of HEVs and EVs continues to grow, the need for battery maintenance, remanufacturing, and replacement services is likely to increase. Batteries are a crucial component of these vehicles, and proper maintenance and replacement are essential to ensure their efficient operation. Battery degradation can occur over time, particularly if they are not maintained correctly. Battery maintenance services may include diagnostics to identify any issues with the battery, such as a decrease in capacity or a malfunctioning module. Remanufacturing is the process of cleaning the battery and its components, replacing any damaged parts, reconditioning modules, and ensuring that the battery is operating within its recommended parameters. According to a report by ResearchAndMarkets, the global market for battery maintenance and replacement services is expected to grow at a CAGR of 7.65% from 2020 to 2027. Companies such as Hybrid Battery 911 are leading the way with mobile battery repair and replacement. Concepts such as greenlight hybrid are allowing traditional vehicle repair shops to participate in the growing HEV/EV aftermarket opportunities.
- Second Life Reuse: With the increase in demand for HEVs and EVs, there is also a growing need to find new uses for used batteries. The aftermarket industry can take advantage of this opportunity by offering second-life solutions for batteries that have reached the end of their life in vehicles. These batteries can be repurposed for stationary energy storage solutions, such as for home solar power systems or grid-scale energy storage facilities. The aftermarket industry can provide installation and maintenance services for these second-life battery systems, helping to reduce waste and promote sustainability. According to a report by IDTechEx, the second-life battery market is expected to reach $7 billion by 2033, up from $128 million in 2018. Companies such as Nuvant Systems are leading the way with battery reconditioning equipment used to bring batteries back to life for reuse.
- Recycling and Disposal: The demand for HEVs and EVs is also driving the need for responsible recycling and disposal of their batteries. These batteries contain various materials, including lithium, cobalt, nickel, and manganese, which can harm the environment if not disposed of correctly. The aftermarket industry can play a vital role in battery recycling and disposal by offering services to dispose of and recycle batteries safely. The complexity of the recycling process is a significant challenge, as the materials in the battery must be separated and processed sustainably. The aftermarket industry can provide these services, ensuring that batteries are recycled environmentally and sustainably. According to a report by IDTechEx, the market for EV battery recycling is expected to reach $31.5 billion by 2031.
Conclusion
The HEV and EV market is poised for growth, and the aftermarket industry is well-positioned to capitalize on this trend. As more consumers switch to HEVs and EVs, the demand for maintenance, repair, and customization services will likely increase. The aftermarket industry can play a crucial role in meeting these needs while contributing to developing a sustainable transportation system. The aftermarket industry can become a significant HEV and EV market player with the right strategy and investments. To learn more about how to partner with A3 Global and take advantage of the changing aftermarket, contact us here.
